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Spending Problem or Revenue Problem?

Is Looming Social Security, Medicare Trust Fund Insolvency a Spending Problem or a Revenue Problem?

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Greenbeard

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I've seen many debates about federal spending where some insist we have a "spending problem" requiring cuts and others insist with a "revenue problem" requiring tax increases. It's often pretty abstract, though. But we have a very tangible case study coming up in a few years:

Retirees Face an $18,100 Benefit Cut in 7 Years

If this represents a revenue problem, the fix is relatively straightforward: perhaps removing the cap on Social Security taxes and/or increasing the payroll tax rate and/or increasing income (or other) taxes.

If it's a spending problem, the issue largely fixes itself, as the default outcome will be spending cuts to match the available incoming revenue (resulting in a pretty decent-sized sudden decrease in benefits).

So what's the right way to view the situation? Spending or revenue problem?
 
If the Republicans didn't adopt a tax cut craze with Reagan, we wouldn't have a debt problem. So yeah, revenue problem.

Only the really rich understand and mean it when they say "spending problem". The rest of the GOP voters simply imagine that a ton of money is wasted on other undeserving folk, while they deserve whatever it is they benefit from themselves. But then...what they benefit from hasn't really been cut. It will be. Hence the Medicaid purge is slated to happen right after the midterms....before they know.

Hence the culture wars to keep the base distracted. As long as someone undeserving, some unperson, is being hurt...well...that's ok then.
 
Revenue => Spending => Benefits for taxpayers

The main problem I see is taxpayers don't see enough benefits from the tax revenue they provide.
 
Spending Problem or Revenue Problem? Both. As much as our national debt is, to fix this problem would have to be both a spending cut and a tax increase. You’re not going to come close to fixing this problem without doing both.
 
Perotista said:
Spending Problem or Revenue Problem? Both. As much as our national debt is, to fix this problem would have to be both a spending cut and a tax increase. You’re not going to come close to fixing this problem without doing both.
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Seems like a 24% benefit cut in 2032 will solve the problem. And it requires no new laws or actions from our leaders at all.
 
You missed out what is maybe the most significant problem. Mismanagement of funds. Whilst other countries around the world manage their national SS funds to achieve strong commercial returns, the US uses the SS etc funds as easy/cheap money to fund continuous deficits. If you look at countries like Norway, Canada, New Zealand (and others), they achieve ongoing returns close to 10% per annum decade after decade, vs the US failing to achieve even half that number in recent decades. Imagine if the SS fund had been achieving 10% returns for the past 30 years like these other countries have. There would be so much money the US funds wouldn't know what to do with it. Instead we are looking at the funds being rapidly depleted.
 
Pawns in the game are those who can't make much noise.
 
It is blatantly, or at least primarily a revenue problem, directly as a consequence of fiscally irresponsible Republicans, keeping in mind that they've substantially further expanded their reckless, largely rich oriented, tax cuts since this report: https://www.budget.senate.gov/imo/media/doc/GOP Policies Caused the Deficit REPORT 10-15-18.pdf
 
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It’s both a spending and a revenue problem. The government takes in 5 trillion and spends 7 trillion. No reasonable person believes we can cut 2 trillion in spending and no reasonable person believes we can tax another 2 trillion in revenue.
 
Greenbeard said:
If this represents a revenue problem, the fix is relatively straightforward: perhaps removing the cap on Social Security taxes and/or increasing the payroll tax rate
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Both of those are extremely unpopular.

Greenbeard said:
and/or increasing income (or other) taxes.
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Name a tax increase that isn't unpopular and will fix the problem.
 

Both.

No amount of realistic taxation would cover existing deficit spending, let alone the additional aid that would be needed due to the economic turmoil in the event you would enact tax reforms mostly targeting the wealthy. Even if you revert corporate taxes to what they were under Eisenhower, adjust tax brackets to be identical to what they were in 1980 and lift the social security cap, you wouldn't even completely remove deficit spending, let alone reduce the debt. If in addition to all of those things you also dramatically cut military spending by nearly half, you remove deficit spending, but pay a very small amount on the debt annually. I think people don't respect what reducing military spending means for a global empire like ours for what it's worth.

There's no easy way out of this in the current conditions.
 
More than once I've presented a tax code change which would resolve the budget deficits, make Social Security permanently solvent, reduce inflation and make Federal spending increases more difficult to gain voter support.
The fix would be accomplished by changes in the Federal Individual Income Tax code.
But for that to happen would require both democrat and republican voters to come together and demand their elected representatives do what is asked of them.
 
Medicare is the bigger problem. With 401k’s and other retirement investments, a significant percentage of Americans are theoretically capable of funding most of their own retirement.

However, the vast majority of Americans are completely uninsurable in their old age absent a program like Medicare. Think about what an unsubsidized premium would be for insurance in the private sector for a couple in their 70s due to the risk an insurer has providing them health coverage and the older they got, the higher their risk.
 
Greenbeard said:
I don’t favor the tax increase option.
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How about a literal reversion to the taxes we had prior to Republicans thinking it was a great idea to give, again predominantly the rich, four separate and distinct, multi-trillion permanent tax holidays between Reagan, Bush and Trump?

I'm not unsympathetic to addressing the spending side, though in the case of Medicare specifically, it will likely require a radical change to the payer system per a public option or singlepayer restructure.
aociswundumho said:
Seven years from now no one is going to remember or care.
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If the Democrats are smart about campaigning they will; definitely a huge if however, particularly in the event their demonstrably useless 'moderate' leadership remains in charge.
 
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